Vancouver currently has the strongest industrial real estate market in the world, according to a new analysis by CBRE Group Inc.
This robustness was in large part due to the intense demand for the city’s warehouses, which have propelled the city’s lease rates to grow 29% year-over-year in Q1 2018 – vastly outstripping the global average of 3%.
“Industrial previously was almost like a forgotten asset class,” CBRE Vancouver vice president and sales manager Jason Kiselbach said, as quoted by Bloomberg. “But we haven’t even scratched the surface of the demand that’s going to continue to grow and put more pressure on the industrial market.”
“These rising lease rates really speak to the strength of the economy -- the growth in population, consumer spending.”
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Kiselbach cautioned of possible supply problems in the near future, however, as a significant portion of prime property near Vancouver is exclusively allocated to agricultural use.
Industry observers have previously warned of the possibility that the market’s industrial land could get depleted as early as 2020, with Port of Vancouver CEO Robin Silvester saying that such a situation would take the wind out of the metropolitan economy’s sails and turn the city into a retiree-and-tourist trap.
IKEA and BMW AG are among Vancouver’s most notable clients, acquiring the largest proportion of the city’s available spaces for industrial and logistics purposes.
“The big household retail names -- you don’t realize that everything that they provide you has to come through a warehouse,” Kiselbach stated. “The new retail is really warehouse direct sales.”
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